Wild Oats: Pricing

Pricing of Wild Oats Markets

Objectives of pricing objectives: profit-oriented, sales-oriented, or status quo

With food shopping, pricing is usually be assumed to be ‘all.’ Most persons do not wish to spend a great deal of money on their weekly food budget, especially if cheaper alternatives are offered elsewhere, within a reasonable distance. The organic market Wild Oats must sell its products at slightly or much higher prices to make a profit, given the financial demands of organic and small-scale local farming and sustainable local fishing. Wild Oats’ pricing must be low enough so that consumers do not grow outraged at the prospect of spending an obscene amount of money for fruit, but enough to cover the costs of production. Partially to distract the customer from this fact, the Wild Oats website advertises: “Besides countless on-sale items, Wild Mail also contains delicious recipes, event information, health resources, exclusive offers and more.” (“Wild Oats: What’s on Sale,” Wild Oats Official Web page, 2006) Thus, pricing is sales-oriented, rather than purely profit-oriented because Wild Oats does not and cannot offer the lowest prices, or even competitive or status quo prices in comparison to competing, more traditional grocery stores (much less budget grocery stores like Wal-Mart).

Markups in the distribution channel

Wild Oats notes its: “The Fair Trade Certified label guarantees that farmers and farm workers receive a fair price for their labor, the equivalent of a living wage. This allows them to meet production costs, feed their families, send their children to school, protect the environment and invest in their farms for the future.” (“Community Commitment: Fair Trade,” Wild Oats Official Web page, 2006) This also means, however, that labor costs are higher for producers of Wild Oats’ Fair Trade products. Although Wild Oats’ commitment to buying from local producers whenever possible may mean cheaper shipping costs small farmers may have to sell their goods at higher prices to make a profit, as these small farmers function on less of an economy of scale, unlike larger agricultural farms. Organic produce, as it is grown without pesticides, is also more costly for the farmer, and this cost is passed onto Wild Oats, and therefore onto the Wild Oats shopper.

Pricing flexibility: discounts, personalized pricing, negotiable pricing

Wild Oats thus has limits upon its pricing flexibility, as it cannot negotiate the lowest possible price on, say, tomatoes, if it demands fair trade, fair labor practices, and that certain farming standards be met by its producers. There are limited negotiation possibilities with a small, local farmer who must sell his limited crop at a certain price to make a profit. This limits the availability of discounts on a regular basis, even to regular shoppers. Shoppers may occasionally gain a small discount on seasonal goods, or through personalized rewards programs via a shopping card or coupon, but it is not a reliable occurrence.

Price strategies over the product life cycle

Wild Oats offers email notifications to subscribing consumers of sales, and thus consumers can be notified of weekly produce price declines in price. Some produce may be reduced in price due to seasonal considerations, but not specifically because of the product life cycle of organic blueberries. Even the online sales information for Wild Oats products do not advertise any specific discounts, regarding dry goods, regardless of season or venue. (“Shop for Wild Oats at Amazon.com,” Official Web page, 2006) Thus, there is no specific strategy to reduce prices for new products, or to reduce prices for products at the end of the life cycle, given the constraints of the input costs of food items.

Factors that affect the sensitivity of the product’s pricing

The availability of non-organic substitutes is an obvious concern regarding product pricing. Many consumers will not patronize Wild Oats if there is an economic downturn, and they cannot afford to buy locally. Even wealthier consumers who patronize Wild Oats likely have a limited share of their weekly income that they are willing to buy for groceries.

Wild Oats does have some consumers that do not have as much flexibility as other consumers, however. For example, consumers who are wheat-intolerant, who are on low-carb diets, or who have other dietary needs that are not likely to be met at conventional supermarkets may have to patronize Wild Oats for the sake of their special diets.

Use of psychological pricing techniques: bait pricing, lead pricing, prestige pricing

Virtually all of Wild Oats pricing is dependant upon prestige pricing. Wild Oats deploys a considerable amount of its advertising to convince consumers that humanely produced, organic, and environmentally friendly farming and production methods justify a higher price for these goods. Also, its promotions stress the presumed health benefits of such goods for the consumer.

Product line pricing factors: how it is determined, how cannibalism is minimized product’s exclusivity and rarity is the primary determinant of the pricing of all Wild Oats products. The difficulty of finding organic products that are produced in a fair manner, of finding produce that is locally grown, and the difficulty for customers with dietary constraints to find goods they can eat, are presumed to necessitate and justify the higher price of Wild Oats goods. Wild Oats clearly informs the customer of why prices are higher, but it is up to the customer to determine if this higher cost is truly justified. Cannibalism within the market is minimized because some customers are likely to face few alternatives at other venues, or at least will not be able to buy all of their specialty goods at one store that is close to their home.

Works Cited

Community Commitment: Fair Trade.” (2006) Wild Oats Official Web page. [6 Aug 2006] http://www.wildoats.com/u/community100066/

Shop for Wild Oats at Amazon.com.” Wild Oats Official Web page. [6 Aug 2006]

http://www.wildoats.com/redesign/shop.php

Wild Oats: Home.” (2006) Wild Oats Official Web page. [6 Aug 2006]

http://www.wildoats.com/u/home/

Wild Oats: Holistic and Health Information.” Wild Oats Official Web page. [6 Aug 2006]

http://www.wildoats.com/u/health/

Wild Oats: What’s on Sale.” (2006) Wild Oats Official Web page. [6 Aug 2006]

http://www.wildoats.com/u/onsale